Just when you thought things couldn't get any worse, here comes another plan for state regulation. Barack Obama wants to restrict the private activity of financial institutions, including those which never asked for a bail-out. Gordon Brown wants to copy him. I have remarked many times before that every measure taken by Labour in response to the credit crunch has made things worse. No crisis is so severe that it cannot be exacerbated by government intervention. The new proposed policy is, as TheTimesputs it, "a short-term populist response with little economic logic".

"Never again will American taxpayers be held hostage by a bank that is too big to fail," says the 44th president. But American taxpayers never supported the bail-out in the first place. In the United States, as in Britain, the political class pursued a policy which, according to every opinion poll, was unpopular. As usual, the politicians were wrong, the people right: the oxen had more sense than the grasshoppers.

Why did MPs and Congressmen support a policy that their constituents disliked? Partly because of the "Something Must Be Done" fallacy: the baleful modern notion that the government's response to a crisis must be proportionate to the degree of media anxiety rather than the scale of the problem. Mainly, though, because ministers allowed their policy on banking to be determined by bankers. As Douglas Carswell says, we are in the world of Atlas Shrugged, a world of back-room deals, of ententes between big government and big corporations, of conspiracies against the public weal hatched in the name of necessity.

What would my alternative have been? The alternative to nationalising financial instititutions is, you know, not nationalising them. The alternative to rescuing some very rich individuals with taxpayers' money is to let taxpayers keep their money. I have told the story before of how, in New Zealand, the withdrawal of agrarian subsidies prompted fears of a banking collapse. On that occasion, though, ministers refused to give the bankers the bail-out they demanded, with the result that the banks had to sort the problem out themselves – thereby almost certainly averting the meltdown that a bail-out would have provoked.

No one forced either Barack Obama or Gordon Brown to hand over our billions. No one held them hostage. It really is a bit rich for them, of all people, to start attacking the institutions which they insisted on subsidising without our consent.